Referring to Question 12 , specifically a CD rollover. Am I understanding this question correctly? From an operational standpoint, how should we document that the customer "agrees to notify the financial institution of any change in such information"? Since that requirement only applies to business CDs, I hesitate to enhance the Certification Form we are using for all accounts. However, we will need to obtain confirmation from the customer when a business CD is opened because that product will automatically rollover.

Not sure of your documentation setup, but if you have the ability to have account specific forms, you could document it by including that language on the business CDs only.

For us, I think the only way is to add verbiage to the Certification Form. I guess it won't hurt anything if everyone agrees to notify us of any changes.

This is how we chose to handle it. We are adding it at the bottom with the Certified/Agreed to wording.

I agree that the easiest way to deal with this is to simply add some language to the COB form itself than trying to add it to another document.

Anyone willing to share their wording? I just added a sentence to the end.


I, __________________________________________ (name of person opening account), hereby certify, to the best of my knowledge, that the information provided above is complete and correct. I further agree to notify XXXXX Bank if there are any changes to this information.
Signature: ____________________________________________ Date: ________________________________

We can't wrap our heads around how when a CD automatically renews the customer does not even have to come to the bank, but we are now required to get this for these customers.

That's exactly what I added TryingtoComply!

I agree. Seems like the only thing you can do is mail the form and track to make sure it gets returned. But we all know that there will be some customer that will not return it. I'm just beginning to think about this and am interested to know how others are planning to approach this.

On existing accounts that renew - pre-notification - no return - no renewal. You cut them a check. New accounts, you use the out of : You will notify us if this changes.

Yeah, that's what I was thinking. Which means we need to get on this right away.

First, establish how big of an issue this really is. (Perhaps less of one than the amount of hand wringing it has generated suggests.) How many of these time deposits do you have? Total dollar amount? Their importance to your ALM program or overall funding? (Talk to your CFO.) Exactly how many legal entity customers are involved?

Second, figure out what your bank wants; i.e. do you want to continue to offer this product to legal entity customers or offer them only single maturity time deposits? (These instruments are not covered by Reg DD, but discontinuing the product offering should still entail your sending an advance notice saying the time deposit will not be renewed and that a check will be sent when it matures.)

If you are going to continue the product you can set up a tracking mechanism wherein you reach out to each customer one at at time prior to the maturity of their first instrument maturing on or after May 11, sending them a modified Appendix A and following up individually, to make sure you get a signed copy back. Depending on the terms of the time deposits involved, this could go on for many months...

Alternatively, you could contact the customers involved en mass now, sending each (one per customer, not one per instrument) a modified Appendix A with a cover letter explaining the government's actions and asking them to return the completed and signed Appendix A promptly. Then, you would begin your follow up process, focusing on the customers with near term maturities.

If you chose, you could instead reach out to each customer individually, obtain the information over the phone, e-mail your contact the completed Appendix A, asking them to sign and return it on receipt. There would still be a follow-up mechanism for some people who are "too busy" to sign their name, but the the program would not last indefinitely and could be managed by a single person who actually comprehends what is happening.

In normal "compliance thinking," there should be an issue about who should sign Appendix A in a "triggering event" other than the opening of a new account. Really, who is actually entitled to make a credible promise of future action on behalf of the company? However, since Appendix A is normally executed by "the natural person opening an account" I would say that just about anyone from the custodian on up could sign it and it would have the same practical effect.

P.S. FWIW, I would make the "modification" a separate clause requiring a separate signature...

P.S. FWIW, I would make the "modification" a separate clause requiring a separate signature..

I believe that is what we are doing. We will use the Certification from our forms vendor and then add another document into the workflow with the added language.

What’s interesting to me is that they are allowing us to rely on a certification that states the customer will notify us of any changes for auto-renewing CDs and loan renewals, but not for any other type of account opened by an LEC. This could be a “one and done” requirement. The fact that we have to obtain the CBO every time an LEC opens a new account is ridiculous.

Seems like they are just bent on making the definition of "new account" in this rule match the CIP regulations.

^^ Agree!

I think they would say they threw the industry a bone and we should be grateful...

On all other products, the legal entity customer's representative (whoever that is) can just confirm verbally that nothing has changed. You must make a record of the fact they said it (check a box on a screen?) and keep that for record 5 years from the day the account is closed.

I heard an examiner (one on a regulatory panel, so high enough on the food chain to speak for the agency in public) say that they had been directed to focus on compliance with the literal requirements of the regulation, not to talk about enhancements or best practices, just to evaluate whether the bank did what the regulation clearly requires. It's worthy of note that the regulators figured out that FinCEN's first "armored car ruling" was ridiculous and ignored it. Instructing examiners to focus on literal compliance could be code for the fact that the agencies can't see the emperor's new clothes either.

Ken,

Why do you believe the modification should be a separate clause with a separate signature?

It's definitely not required. That's just the way I think.

If your bank's signature card incorporates the IRS TIN certification language it must be signed once to agree to contract terms and a second time to agree to the certification. It's referred to as a "double execution" card. It's in no way relevant here, but that concept has affected my thinking.

I'm not trying to expand the coverage of legal requirements I know to be worthless. I'm trying to assure that my claim that I don't need a new Appendix A each time they roll over rests on the strongest possible foundation.

I understand. I'm running out of room on my form. I'll give it some thought! Thanks!

What if we added verbiage to the business deposit account agreement that stated something like "you are responsible for notifying us of any change to the certified beneficial ownership information as soon as possible......." Is the signature of the person opening the account (who may or may not be able to make a promise for the entity) required??

You can certainly add the language. The customer might believe and act on it, but that type of assurance is only going to constitute "compliance" if you are talking about an automatically renewable time deposit, the subject of this thread. It will not work on any otherwise open ended relationship.

So, I get it that this statement is required on existing automatically renewable CDs when it is time for the CD to renew after May 11th, 2018. However, just to confirm, on new automatically renewable CDs opened, can we get this statement on the front end? Or, must we wait and get it at the first renewal?

You can get it when you open the CD and get the BO form. But for ones that exist today but renew on or after May 11, you'll need to get the form at renewal.

I'm trying to avoid changing the Certification Form, but yet complying with the rollover CD issue. If we open a CD for a legal entity after May 11, they would receive the deposit account agreement and complete the Certification Form. Then the CD could rollover for the next 20 years. The only issue is I would not have a signature about being notified of any ownership changes.

I just started looking at this post. So, since the FAQ's have yet to be revised, and we have to comply with the rule, are most bank's adding language to their BO certification form that states that if any of the information changes, they will notify the bank? And that stops the customer from having to come into the bank and sign a new BO certification form?

I was contemplating using that language for CD and loan renewals, not across the board.

Generally, we will have one cert form per account, as of now. I think that's the simplest for the front lines and also lends itself to retention compliance.